The phrase classical liberalism is also sometimes used to refer to all forms of liberalism before the 20th century. And, after 1970, the phrase began to be used by libertarians to describe their belief in the primacy of economic freedom and minimal government. It is sometimes difficult to tell which meaning is intended in a given source.

Definitions

The phrase classical liberalism is used in standard academic sources to mean early liberalism,[5] often with particular emphasis on the liberalism of Jacksonian democracy in the 19th Century, which stressed laissez-faire economics and originalism[6].

Another use of the phrase is by libertarians, who use it to mean a form of liberalism in which the government does not provide social services or regulate industry and banking. Libertarians often claim that this belief was shared by the American Founding Fathers.[7] Libertarian classical liberalism is also called laissez-faire liberalism.[8]

The qualification classical was applied retroactively to distinguish it from more recent, 20th-century conceptions of liberalism and its related movements, such as modern liberalism and the Civil Rights movement.[11]

Modern day classical liberals are suspicious of all but the most minimal government[12] and object to the welfare state.[13]Ludwig von Mises, Friedrich Hayek, and Milton Friedman, are credited with influencing a revival of classical liberalism in the 20th century after it fell out of favor beginning in the late 19th and early 20th centuries due to major economic depressions.[14][15] In relation to economic issues, this revival is sometimes referred to, mainly by its opponents, as "neoliberalism".

Overview

In the United States, liberalism took a strong root because it had little opposition to its ideals, whereas in Europe liberalism was opposed by many reactionary interests. In a nation of farmers, especially farmers whose workers were slaves, little attention was paid to the economic aspects of liberalism. But as America grew, industry became a larger and larger part of American life, and during the term of America's first populist president, Andrew Jackson, economic questions came to the forefront. The economic ideas of the Jacksonian era were almost universally the ideas of classical liberalism. Freedom was maximized when the government took a "hands off" attitude toward industrial development and supported the value of the currency by freely exchanging paper money for gold. The ideas of classical liberalism remained essentially unchallenged until a series of depressions, thought to be impossible according to the tenets of classical economics, led to economic hardship from which the voters demanded relief. In the words of William Jennings Bryan, "You shall not crucify the American farmer on a cross of gold." Despite the common recurrence of depressions, classical liberalism remained the orthodox belief American businessmen until the Great Depression.[20] The Great Depression saw a sea change in liberalism, leading to the development of modern liberalism. In the words of Arthur Schlesinger Jr.:

when the growing complexity of industrial conditions required increasing government intervention in order to assure more equal opportunities, the liberal tradition, faithful to the goal rather than to the dogma, altered its view of the state," and "there emerged the conception of a social welfare state, in which the national government had the express obligation to maintain high levels of employment in the economy, to supervise standards of life and labor, to regulate the methods of business competition, and to establish comprehensive patterns of social security.[21]

In Europe, especially, except in the British Isles, liberalism had been fairly weak and unpopular relative to its opposition, like socialism, and therefore no change in meaning occurred.[20]

[A]t the heart of classical liberalism", wrote Nancy L. Rosenblum and Robert C. Post, is a prescription: "Nurture voluntary associations. Limit the size, and more importantly, the scope of government. So long as the state provides a basic rule of law that steers people away from destructive or parasitic ways of life and in the direction of productive ways of life, society runs itself. If you want people to flourish, let them run their own lives."[24]

Classical liberalism places a particular emphasis on the sovereignty of the individual, with private property rights being seen as essential to individual liberty. This forms the philosophical basis for laissez-faire public policy. The ideology of the original classical liberals argued against direct democracy "for there is nothing in the bare idea of majority rule to show that majorities will always respect the rights of property or maintain rule of law."[13] For example, James Madison argued for a constitutional republic with protections for individual liberty, over a pure democracy, reasoning that in a pure democracy, a "common passion or interest will, in almost every case, be felt by a majority of the whole...and there is nothing to check the inducements to sacrifice the weaker party...."[25]

According to Anthony Quinton, classical liberals believe that "an unfettered market" is the most efficient mechanism to satisfy human needs and channel resources to their most productive uses: they "are more suspicious than conservatives of all but the most minimal government."[12]Anarcho-capitalistWalter Block claims, however, that while Adam Smith was an advocate of economic freedom he also allowed for government to intervene in many areas.[26]

Classical liberalism holds that individual rights are natural, inherent, or inalienable, and exist independently of government. Thomas Jefferson called these inalienable rights: "...rightful liberty is unobstructed action according to our will within limits drawn around us by the equal rights of others. I do not add 'within the limits of the law', because law is often but the tyrant’s will, and always so when it violates the rights of the individual."[27] For classical liberalism, rights are of a negative nature—rights that require that other individuals (and governments) refrain from interfering with individual liberty, whereas social liberalism (also called modern liberalism or welfare liberalism) holds that individuals have a right to be provided with certain benefits or services by others.[28] Unlike social liberals, classical liberals are "hostile to the welfare state."[13] They do not have an interest in material equality but only in "equality before the law."[29] Classical liberalism is critical of social liberalism and takes offense at group rights being pursued at the expense of individual rights.[30]

Classical liberals advocate a gold standard to place fiscal constraints on government[32] Adam Smith was concerned with the government manipulation of the money supply. To prevent this he favored a monetary system based on gold and silver, and also supported free banking.[33] Other classical economists that formulated the tenets of a gold standard include Cantillon, Hume, Ricardo, Thornton, Mill, Cairnes, Goschen, and Bagehot.[34]

Classical liberalism, free trade, and world peace

Several liberals, including Adam Smith and Richard Cobden, argued that the free exchange of goods between nations could lead to world peace, a view recognized by such modern American political scientists as Dahl, Doyle, Russet, and O'Neil. Dr. Gartzke, of Columbia University states, "Scholars like Montesquieu, Adam Smith, Richard Cobden, Norman Angell, and Richard Rosecrance have long speculated that free markets have the potential to free states from the looming prospect of recurrent warfare".[36] American political scientists John R. Oneal and Bruce M. Russett, well known for their work on the democratic peace theory, state:

The classical liberals advocated policies to increase liberty and prosperity. They sought to empower the commercial class politically and to abolish royal charters, monopolies, and the protectionist policies of mercantilism so as to encourage entrepreneurship and increase productive efficiency. They also expected democracy and laissez-faire economics to diminish the frequency of war.[37]

Adam Smith argued in the Wealth of Nations that as societies progressed from hunter gatherers to industrial societies the spoils of war would rise, but the costs of war would rise further, making war difficult and costly for industrialized nations.[38]

...the honours, the fame, the emoluments of war, belong not to [the middle and industrial classes]; the battle-plain is the harvest field of the aristocracy, watered with the blood of the people...Whilst our trade rested upon our foreign dependencies, as was the case in the middle of the last century...force and violence, were necessary to command our customers for our manufacturers...But war, although the greatest of consumers, not only produces nothing in return, but, by abstracting labour from productive employment and interrupting the course of trade, it impedes, in a variety of indirect ways, the creation of wealth; and, should hostilities be continued for a series of years, each successive war-loan will be felt in our commercial and manufacturing districts with an augmented pressure. Richard Cobden[39]

By virtue of their mutual interest does nature unite people against violence and war…the spirit of trade cannot coexist with war, and sooner or later this spirit dominates every people. For among all those powers…that belong to a nation, financial power may be the most reliable in forcing nations to pursue the noble cause of peace…and wherever in the world war threatens to break out, they will try to head it off through mediation, just as if they were permanently leagued for this purpose - Immanuel Kant, the Perpetual Peace.

Cobden believed that military expenditures worsened the welfare of the state and benefited a small but concentrated elite minority. Summing up British imperialism, which he believed was the result the economic restrictions of mercantilist policies. To Cobden, and many classical liberals, those who advocated peace must also advocate free markets.

Redefinition of liberalism from laissez-faire form to interventionist form

According to William J. Novak, liberalism in the United States shifted, "between 1877 and 1937...from laissez-faire constitutionalism to New Deal statism, from classical liberalism to democratic social-welfarism".[41]

Others see the rise of social liberalism as due to the extreme poverty of the working class, frequent unemployment caused by cyclic depressions, and the growing power of the rich to establish monopolies (called at the time cartels), and to the influence on legislation of "campaign contributions" or outright bribes.

According to Hobhouse's book Liberalism, written in 1911, these changes in the latter part of the 19th Century caused classical liberalism to be replaced by social liberalism, which includes qualified acceptance of government intervention in the economy and the collective right to equality in dealings, which Hobhouse called "just consent". F. A. Hayek wrote that Hobhouse's book would have been more accurately titled Socialism.[42] (Hobhouse called his beliefs "liberal socialism".)

A form of liberalism that arose in the second half of the 20th Century, calling itself "conservatism", professes to echo the views of the classical liberals, and rejects the ideas of the social liberals.

Liberalism and libertarianism

Raimondo Cubeddu of the Department of Political Science of the University of Pisa says "It is often difficult to distinguish between 'libertarianism' and 'classical liberalism'. Those two labels are used almost interchangeably by those we may call libertarians of a 'minarchist' persuasion—scholars who, following Locke and Nozick, believe a state is needed in order to achieve effective protection of property rights".[43] Libertarians see themselves as sharing many philosophical, political, and economic undertones with classical liberalism, such as the ideas of laissez-faire government, free markets, and individual freedom. Nevertheless, Samuel Freeman, a staunch advocate of 'welfare liberalism' (that he argues should be called 'High liberalism') rejects this as a mere "superficial" resemblance:

Libertarianism's resemblance to liberalism is superficial; in the end, libertarians reject essential liberal institutions. Correctly understood, libertarianism resembles a view that liberalism historically defined itself against, the doctrine of private political power that underlies feudalism. Like feudalism, libertarianism conceives of justified political power as based in a network of private contracts. It rejects the idea, essential to liberalism, that political power is a public power to be impartially exercised for the common good.[44]

Those who emphasize the distinction between classical liberalism and libertarianism point out that some of the key thinkers of classical liberalism were far from libertarian:

Adam Smith should be seen as a moderate free enterpriser who appreciated markets but made many, many exceptions. He allowed government all over the place.[45]

For example, Adam Smith supports public roads, canals and bridges, though he favored the use of a toll to pay for these public works, so that they would be paid for proportionally to their consumption (e.g., putting a toll).[46]

Adam Smith also supported government regulation of the economy in particular when it benefits the poor or working-class[47], and was opposed to income inequality which he believed stemmed from concentrations of private property ownership.[48]

Alan Haworth argues that libertarianism and liberalism are fundamentally incompatible because the checks and balances provided by liberal institutions conflict with the support for complete economic deregulation offered by most libertarians.[52]

These kinds of disputes continue in the present day, and are compounded by factions that argue among themselves.

References

^ "The term classical liberalism was applied in retrospect to distinguish earlier nineteenth-century liberalism from the new or modern liberalism, here termed social liberalism, of Green and Hobhouse.", p. 52, James L. Richardson, Contending Liberalisms in World Politics: Ideology and Power, Lynne Rienner Publishers, 2001.

^ William J. Novak, "The Not-So-Strange Birth of the Modern American State: A Comment on James A. Henretta's 'Charles Evans Hughes and the Strange Death of Liberal America'", Law and History Review 24, no. 1 (2006)

^ "People who call themselves classical liberals today tend to have the basic view of rights and role of government that Jefferson and his contemporaries had." [1]

^ Razeen Sally, Classical Liberalism and International Economic Order: Studies in Theory and Intellectual History (London: Routledge, 1998), 17 (ISBN 0-415-16493-1). "Hence the normative core of classical liberalism is the approbation of economic freedom or laissez-faire—Adam Smith's 'obvious and simple system of natural liberty'—out of which spontaneously emerges a vast and intricate system of cooperation in exchanging goods and services and catering for a plenitude of wants."

^ James L. Richardson, Contending Liberalisms in World Politics: Ideology and Power (Boulder, CO: Lynne Rienner Publishers, 2001), 52. "The term classical liberalism was applied in retrospect to distinguish earlier nineteenth-century liberalism from the new or modern liberalism, here termed social liberalism, of Green and Hobhouse. It is taken here to include the political economists' laissez-faire within a broader political philosophy whose central value was securing of individual freedom against arbitrary state power."

^Encyclopædia Britannica Online, s.v. "Liberalism" (by Harry K. Girvetz and Minogue Kenneth), p. 16 (accessed May 16, 2006). "With modern liberalism seemingly powerless to boost stagnating living standards in mature industrial economies, the more energetic response to the problem turned out to be a revival of classical liberalism. The intellectual foundations of this revival were primarily the work of the Austrian-born British economist Friedrich von Hayek and the American economist Milton Friedman."

^ David Conway, Classical Liberalism: The Unvanquished Ideal (New York: St. Martin's), 8. "After falling into almost complete intellectual disrepute towards the end of the 19th century, classical liberalism was rescued from oblivion and revived in the twentieth century by such notable thinkers as Ludwig von Mises and Friedrich Hayek."

^ Raimondo Cubeddu, preface to "Perspectives of Libertarianism", Etica e Politica (Università di Trieste) V, no. 2 (2003). "It is often difficult to distinguish between 'Libertarianism' and 'Classical Liberalism.' Those two labels are used almost interchangeably by those whom we may call libertarians of a minarchist persuasion: scholars who, following Locke and Nozick, believe a state is needed in order to achieve effective protection of property rights."

^ James Madison, Federalist No. 10 (November 22, 1787), in Alexander Hamilton, John Jay, and James Madison, The Federalist: A Commentary on the Constitution of the United States, ed. Henry Cabot Lodge (New York, 1888), 56.

^ David Kelley, A Life of One's Own: Individual Rights and the Welfare State (Washington, DC: Cato Institute, 1998).

^ Chandran Kukathas, "Ethical Pluralism from a Classical Liberal Perspective," in The Many and the One: Religious and Secular Perspectives on Ethical Pluralism in the Modern World, ed. Richard Madsen and Tracy B. Strong, Ethikon Series in Comparative Ethics (Princeton, NJ: Princeton University Press, 2003), 61 (ISBN 0691099936).

^An Inquiry into the Nature and Causes of the Wealth of Nations, "When the regulation, therefore, is in favour of the workmen, it is always just and equitable; but it is sometimes otherwise when in favour of the masters."

^An Inquiry into the Nature and Causes of the Wealth of Nations, "Wherever there is great property there is great inequality. For one very rich man there must be at least five hundred poor, and the affluence of the few supposes the indigence of the many."